KEY POINTS:
As the collapse of the finance company sector intensifies, two accountants who signed off on the books of one of the first to hit the wall have pleaded guilty to breaching the Institute of Chartered Accountants' code of ethics.
National Finance 2000 went under in May 2006, owing around $25 million to investors.
Bruce Arnold Mincham and Michael Derek Wood, who both work for Queen St accountants O'Halloran HMT, did audit work for the finance company, which lent its money to a related chain of caryards.
Charges of misconduct in a professional capacity and conduct unbecoming an accountant were dropped before the hearing began this morning at an Auckland hotel.
The men instead each pleaded guilty to a charge of breaching the Institute of Chartered Accountants' code of ethics.
The charges say the men failed to exercise due care and diligence and comply with the institute's technical standards around auditing company books.
Evidence presented this afternoon is expected to centre on whether the auditors properly checked on the nature of related party lending and on claims made by National Finance 2000 that advances to car dealers were secured.
Penalties are unlikely to be announced today, but the tribunal has a range of options.
It can remove the men from the register of chartered accountants, suspend their membership of the institute for up to five years or impose a monetary penalty of up to $20,000. Other penalty options include a formal censure, ordering them to pay costs, attend development courses or not to certain kinds of work.
National Finance 2000 gave loans to customers purchasing vehicles from an affiliated company, Payless Cars, which ran four Auckland caryards. Both were headed by Alan Ludlow, who touted for funds in television commercials even as the companies were struggling.
In October last year the company's loan book was sold to convicted fraudster and 80s high-flyer Alan Hawkins' NZAX-listed finance company Cynotech Holdings for a third of its face value - $7.7 million.
The loans had a face value of $23.5 million, although about $6 million had been written off, while others might not be collectable.
Receiver Colin McCloy of PricewaterhouseCoopers said he planned to return 30c in the dollar to National Finance's more than 2000 debenture stock investors and expected they would eventually recover 40c-45c in the dollar from their investment.
Subordinated investors were still not going to recover anything from the assets in receivership.
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Bruce Mincham and Michael Wood are both directors of Queen St accountants O'Halloran HMT.
The firm's website describes Mincham as an audit specialist and a member of the Institute of Internal Auditors. He has worked on auditing clients from a wide range of industries, including schools and not-profit organisations.
He joined the firm in 2001, leading its audit team after 20 years as a partner at Deloitte.
In the early 1990s he was NZ president of the Chartered Institute of Secretaries and served on the international council for three years. Bruce is a past President and current Treasurer of the Canada New Zealand Business Association, and Trustee and Treasurer of Oxfam New Zealand.
Mincham, says the website, played league and softball at senior level, tramped and climbed mountains. He still collects stamps and enjoys travel and owns competitive dressage horses.
Michael Wood became a partner at O'Halloran HMT in January 2005. He joined in 2003 after nine years at Deloitte. His company describes his specialisation as "audit & assurance services". He has, says his company, "considerable experience in the audit of companies in the manufacturing, distribution and service industries."
He is described as a "keen motoring and aviation enthusiast, and has restored a number of classic cars as well as being an enthusiastic weekend pilot."
- NZ HERALD
